RF Industries, Ltd. (NASDAQ: RFIL) today announced results for the fourth quarter and fiscal year ended October 31, 2014.
Fourth Quarter Results
Sales for the fiscal fourth quarter of 2014 declined by $2.4 million to $6.0 million compared to sales of $8.4 million for the same quarter last year. Net income was $325,000, or $0.04 per diluted share, compared to $25,000, or $0.00 per diluted share, in the same period last year. Net income for the fourth quarter 2013 reflects a $695,000 loss from discontinued operations primarily due to the sale of its RadioMobile division. Results for the fourth quarter and fiscal year ended October 31, 2013 have been adjusted to reflect immaterial corrections made to the Company's previously audited financial statements.
Fourth quarter fiscal 2014 net sales were primarily affected by a $2.0 million sales decline at the Cables Unlimited, Inc. (CUI) segment to $1.9 million for the quarter, compared to sales of $3.9 million at CUI in the same quarter last year.
Gross profit declined to $2.6 million from $3.4 million, but improved, as a percentage of sales, to 44% from 41% of sales in the fourth quarter last year. Fourth quarter selling and general expenses declined by $82,000 to $1.8 million, primarily due to a decrease in headcount in fiscal 2014.
Johnny Walker, President and CEO said, "As part of our strategy to expand sales and market share in the telecom, fiber optic and data center market, the Company acquired New Jersey-based Comnet Telecom Supply, Inc. (Comnet) on January 20, 2015. The acquisition of Comnet was effective as of November 1, 2014 and will, therefore, contribute to our financial results for the entire fiscal year ending October 31, 2015. Like Cables Unlimited, Comnet is a Corning Gold Assembly House and distributes telecommunications and data products. We believe that this acquisition provides a growth opportunity for our fiber optic and custom cabling operations and enables us to enter into the data center equipment solutions market."
Fiscal Year Results
Net sales for the fiscal year ended October 31, 2014 were $23.1 million, compared to sales of $36.6 million for fiscal 2013. Net income was $1.4 million, or $0.16 per diluted share, as compared to $3.6 million, or $0.43 per diluted share, for the same period last year. Net income for fiscal 2013 reflects a $1.1 million loss from discontinued operations due to the sale of its RadioMobile and RF Neulink divisions.
Net sales were primarily affected by a $12.1 million decline in sales at CUI to $7.2 million for the year, compared to sales of $19.3 million at CUI for fiscal 2013. As a result of the drop in sales, CUI had an operating loss of $484,000 for fiscal 2014, compared to operating income of $3.9 million in fiscal 2013.
The Company's gross profit declined to $10.5 million for fiscal 2014, compared to $15.9 million last year, but improved, as a percentage of sales, to 45% in fiscal 2014 versus 43% of sales in the previous year. Selling and general expenses declined to $7.2 million, compared to $8.2 million in fiscal 2013. The decrease in selling and general expenses was primarily due to lower compensation and benefits expense as a result of a decrease in headcount. Additionally, general expenses in fiscal 2013 included lump‑sum bonus payments to senior management and to increased legal and consulting fees in connection with the termination and replacement of an employee.
"Fiscal 2014 results declined primarily due to the completion of a large one-time project to deliver a single line of new cabling product to address the needs of certain telecommunications companies, coupled with an industry-wide decline in the demand for RF Connector and cabling products. We are introducing new products and have acquired Comnet, a complementary business to Cables Unlimited, to expand our market presence in fiber optic cabling and complementary data center products. Our cash position remains strong and we are confident that the Company will remain profitable and that our new product lines and enhanced market presence will reward our investors," said Mr. Walker.
Balance Sheet Data
At October 31, 2014, the Company had working capital of $21.1 million, including cash and cash equivalents of $14.7 million, a current ratio of approximately 10‑to‑1, no long‑term obligations and stockholders' equity of $25.9 million. During fiscal 2014, the Company returned $2.3 million of equity capital to its stockholders as cash dividends and repurchased and retired 22,828 shares of its common stock, in open market transactions, for $104,000.
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